In February, rent prices in the private rental sector increased on a monthly basis for the first time since September last year, according to the latest report from Your Move and Reeds Rains.
As the sector prepares itself for a host of new Government policies, the average rent price in England and Wales is now £791 per month.
The research found that average rent prices are now increasing on a monthly basis for the first time since September 2015, up by 0.1% between January and February.
The average rent of £791 a month is 3.3% higher than a year ago, equivalent to an extra £25 per month for tenants.
First Rent Price Rises Recorded Since September
The report also found that the rate of rent arrears has also increased, as tenants struggle with their finances.
The Director of Your Move and Reeds Rains, Adrian Gill, says: “Spring is here for the rental market. Rents are rising and demand is growing. In a warming market, tenants are beginning to feel the heat when signing new tenancies.
“But this delicate ecosystem of soaring demand from tenants and steady investment from landlords is under threat. Rent rises could now accelerate further, and gentle spring warmth could start to feel less comfortable. If Government attacks on landlords bite – having worsened again in this week’s Budget – the flow of investment from landlords could wilt.”
He explains: “Landlords are increasingly deliberate in their actions and savvy in their business decisions. But all landlords investing steadily in new property to let are the heroes of the buy-to-let industry, not the villains. Thanks to the business acumen and persistence of landlords, Britain’s private rented sector has become home to millions of households and the only real backstop against the weakness of other tenures.
“All landlords, regardless of the number of properties they own, want to provide a quality service as part of earning a reliable return on their investment. For those with the right advice, this is part of operating a successful business model. Avoiding void periods and ensuring a good relationship with reliable tenants is essential. So it is hard to understand the logic behind restricting the flow of new investment, and the competition between existing landlords.”
Gill adds: “Additional taxes on the purchase of new buy-to-let properties will not support the stated aims of these policies – namely to improve homeownership. By attacking buy-to-let, the Government will only serve to push up market rents more quickly, stymieing the efforts of many tenants to raise a deposit to buy a home, while also boosting returns for existing landlords with the best advice to navigate new complications.”1
In Wednesday’s Budget, the Chancellor announced that large-scale buy-to-let investors will be subject to the 3% Stamp Duty surcharge, which is set to be enforced on 1st April.
Regionally, the Midlands has led annual rent growth.
Those living in the East Midlands have seen their rent prices rise by 7% in the last 12 months. This is followed by increases of 6.3% in the West Midlands and 6.2% in the East of England.
These three regions are all ahead of London, with rent prices in the capital up 4.8% on February 2015. As recently as November, London consistently led rent rises in the UK.
Meanwhile, rents are down annually in three out of ten regions. The North East suffered the greatest decline, at 2.5%, followed by Wales at 1.5% and 0.1% in the South East.
On a monthly basis, rents have risen in five out of ten regions. The East of England recorded the highest price rise at 1.1%, with the South East and East Midlands coming in joint second, at 0.6%.
Contrastingly, rent prices in Wales and the North East are now lower than they were in January, down by 0.9% and 0.7% respectively.
After these monthly increases, rents in the West Midlands are now at a record high of £596 per month, with Yorkshire and the Humber also seeing an all-time high of £559 a month.
Despite recording the fastest annual rent rise, prices in the East Midlands are still £1 short of their record high of £610, seen in November 2015.
Unsurprisingly, Your Move and Reeds Rains’ data shows that landlords’ gross annual rental yields are now at a 17-month high.